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Legal Solutions since 1991


CONTENTS From the Managing Directors desk

From the Managing Directors desk

Is it worth hiding money abroad?
Is it worth hiding money abroad?
Are offshore structures worthwhile
in the era of automatic information A study published by the
experts/journalists of the Tax
Jurisdiction Spotlight
Justice Network (TJN) in 2011
United Arab Emirates: 6
claimed that between 21 000
arguments in favour of Sharjah
Media City and 32 000 billion dollars is
Sharjah Media City is one of the best
solutions for the establishment of either hidden, deposited or
invested in the various Offshore
Offshore Banking
Financial Centers (OFC). This is
Our new partner, VirPay
The fintech company offering the amount which the experts at TJN estimate has been accumu-
remarkable banking solutions.
lated in jurisidictions from Switzerland to the Cayman Islands over
the last 50 years.
Bitcoin: real money, or a con of
global proportions? Since then, nobody has supported this figure with concrete
World opinion is divided on this digital
proof, but we really are talking about several thousand billion
currency, which is both an opportunity
and a huge risk. dollars. In the last half century, this fortune has migrated to those

Topic places offering the holders of the assets discretion and an advan-

Cyprus: tax resident status in 2 tageous tax climate. Because there was, is and will be demand
In accordance with new legislation, for such services. Nothing new there. So, the process is not a new
obtaining tax resident status has
one, and the economic and political leaders are only too aware
become easier.
of the rules governing the mechanism. Which is why the Panama
Papers scandal was so ridiculous, as a hack of the server of any
LAVECO Middle East FZCO-Dubai
The new office of LAVECO Ltd. came major service provider would have resulted in similar findings. We
into being because of the opportunities
available in the Middle East. are talking about an enormous mechanism, as from the early 60s

September, 2017 Legal Solutions since 1991

onwards the worlds biggest banks, investment active investments, but rather is placed in passive

funds, insurance companies and multinational vehicles, such as bonds, shares and other such

companies all moved their operations to these investments. In many cases, the clients are not even

OFCs. Just think about the 245 billion or so dollars interested in the return, but just want their money

which Apple holds in bank accounts in Bermuda. If to be secure, even if this involves high expenses,

they repatriated these funds to the USA, they would as is the case with expensive to maintain private

have to pay about 35% in tax. banking accounts.

And here once again, everything is about The question is whether worldwide demand will

money. A bank account opened in Monaco with change in the era of the automatic exchange

the minimum 3 million euro deposit because of information. My answer to that is hardly at all.

thats the minimum required there will bring in The wealth and assets accruing in the world

approximately 50 000 euros a year to the bank are growing. This no longer applies only to North

through the 1.5% asset America and Europe,

handling fee, while there but, as a result of the

is no guarantee that the economic growth in

amount of capital in the Asia, also to China,

account will increase India and even

because of the negative Vietnam. The worlds

interest paid by the bank. rich will continue to

The service provider, on the other hand, is very seek those jurisdictions, whether we call them

happy, thank you very much, because with one Offshore Financial Centers, safe havens or any

contract he has earned 50 000 euros. Multiply that other name, which have been operating for

by the thousands of billions, or even just a fraction decades, providing security and stability for the

of it. The commission of the financial institutes is handling of assets.

gigantic, and in reality it is the client who is paying But, I wonder, what about the more modest

from his own capital, whether it makes a profit or not. client, who doesnt have billions? Is it worth it for

There is also another factor which is typical them to consider offshore companies, structures

of the process: a significant part of the capital and financial solutions, bearing in mind that with

deposited in this way is not moved between the automatic exchange of information the local

September, 2017 Legal Solutions since 1991

tax authority will have information on where they difference if a part of a persons assets does not

have bank accounts, even if it is an account appear on personal accounts, but is invested and

opened for a company in a foreign bank. administered through the accounts of a foreign

In my opinion, there are still numerous advan- company. Personal assets are always more vulner-

tages to operating such a bank account for a able and more easily accessible to others, whether

foreign company. Here are just 5 of the benefits, that is a creditor or the victim of a traffic accident,

though I could list many more. who tries to get more damages from a wealthy

1. This solution is totally legal, and will person. It may even take years for the accounts of

remain so when the exchange of a foreign company to be accessed via the courts.

information begins. Holding money in a foreign 4. An offshore company, particularly

company bank account is not a crime, but a one where the tax is 0%, can spend

possibility which anyone can take advantage of, freely. This is an interesting point, which few people

naturally while adhering to the tax laws, whether think about. In these countries a company can

that be the laws on personal income tax or the spend its post-tax money on all sorts of things.

regulation of controlled foreign companies. Naturally, it can pay a dividend to its owners, which

2. A foreign bank account provides has to be the most common goal of the economic

the possibility for portfolio diver- activity. Of course, then the private individual is

sification. Having a bank account in a country required to pay tax on the received dividend in

outside the one we live in and keeping a part accordance with the laws of the country in which

of our assets abroad is one of the best ways of he or she is resident for tax purposes. This means

avoiding risks in our own country. The second world further taxes. However, a company from, say Dubai

war in Europe provides an interesting historical or Hong Kong is free to spend that post-tax money,

example. If we think about it, the war affected just and may, for example, purchase a yacht, or pay for

about the entire continent, but for some reason its staff or general maintenance. Similarly, there are

Hitler didnt invade Switzerland, which even then no strict regulations on how many air tickets can be

didnt have significant armed forces. purchased, and in which class, for those working

3. The companys assets can be sepa- with the company, or on which hotels they can

rated from personal assets. From the stay in when travelling on business, or on how many

point of view of asset protection, it can make a times they dine out in restaurants at the companys

September, 2017 Legal Solutions since 1991

expense. In the case of an offshore company, it is There is always a purpose to the articles

also very difficult to define exactly what is meant by published in the LAVECO Newsletter. The purpose

a business trip. And a significant number of business is to make those who read them that little bit

trips may end in failure or without achieving concrete richer in knowledge and information, and to

business goals. Which is just what happens in reality. help them make better decisions. We would

5. Discretion, to ward off local well- like you, the reader, to be on the winning side.

wishers. Wealth continues to The early years of the 21st century are all about

favour discretion. Although many people like to dynamic change. What I wrote about earlier

show off their wealth, the majority tend to avoid are cases, situations and human characteristics

the spotlight. And the reason is precisely to avoid which have existed for hundreds of years. Ever

the attention of the well-wishers. Who wants to since people started accumulating wealth, its

be inundated with visits from friends, acquaint- handling and security have been sources of worry

ances or neighbours asking to borrow money just and headaches. But it is also important to be able

because someone has more than them? Often it to create a happy balance between spending

is not even possible to tell our closest relatives how and accumulating. What is money worth if it is just

much we earn, because on top of envy, they also rotting in a bank, and we dont invest it or use it

start making demands. And I could continue the sensibly? And this is not only a question for local

list with the self-appointed friends, girlfriends who businessmen, but is also characteristic of busi-

also make financial demands on those who have nessmen all over the world.

enjoyed financial success. And all this without even With warm regards,

mentioning taxes. Even if someone pays 0% tax in Lszl Vradi

their own country, this point is still valid, and it is not Managing Director

even necessary to to go into detailed tax-planning. LAVECO Ltd.
September, 2017 Legal Solutions since 1991

Jurisdiction spotlight

United Arab Emirates:

6 arguments in favour of Sharjah Media City
The Sharjah Media City (SAMC) Free Zone, established in the Emirate of Sharjah in the Unites Arab

Emirates, offers excellent opportunities for those interested in establishing webshops for international

trading purposes or for the provision of international services. Here are 6 reasons why it is worth

choosing SAMC:

The rate of corporation tax in Sharjah is 0%, which is considerably lower than the rates in

Europe (9-25%)

The VAT rate in Sharjah is also 0%, again much lower than the rates in Europe (15-27%)

Free Zone companies here can be established with 100% foreign ownership, and still pay

0% tax, even though they are not offshore companies. The company profits can be freely

transferred out of the country.

Bank accounts for Free Zone companies can be opened with the local banks. This is now

considerably more difficult for offshore companies.

The annual licence allowing a company to participate in internet trading is cheaper than

in the Free Zones of other Emirates.

The owner of a Free Zone company is authorised to apply for a residency permit in the

United Arab Emirates.

September, 2017 Legal Solutions since 1991


Bitcoin: real money, or a con of global proportions?

The Bitcoin is currently the worlds most well- us until 2140. There are currently 16.5 million bit-

known cryptocurrency, although very few people coins in circulation, with another 4.5 million or so

know that today more than 1000 types of crypto- of the cryptocurrency which, for example, the Chi-

curreny are recorded on the net, with a total value nese server farms are trying to mine day and night

estimated at some 145 billion dollars. The bitcoin with all of their computers working as one.

exchange rate is soaring, though the main driving As the bitcoin is often used to carry out illegal

force behind this rise is much more likely to be the actions, such as internet blackmail or the pay-

belief bolstered by investors rather than the realis- ment of hackers, the exchange rate tends to

tic purchasing power. drop significantly after each such scandal. This

The bitcoin began its journey on January 3rd 2009, was the case in 2013, for example, when they

when a Japanese man called Satoshi Nakamoto closed down Silk Road, which could be used for

put the algorithm on the internet. The number of illegal purposes, and when the Russian Alexan-

bitcoins which can be uncovered on the net with der Vinnik, accused of laundering 4 billion dollars

the help of computers is slowing down from 2017, through bitcoins, was arrested in Athens in July

although the possibility to mine them will be with this year.

September, 2017 Legal Solutions since 1991


Cyprus: tax resident status in 2 months?

On July 14th, 2017 the Cypriot Parliament decided the individual concerned must have some

on changes in the tax laws, and created the 60- other link to Cyprus

day rule for the clarification of an individuals tax With this legislation, Cyprus has taken a major

resident status. The law will be in force from January step towards attracting those individuals to the

1st, 2017, meaning that individuals resident in Cyprus island, the majority of whom enjoy freelance

for tax purposes will be able to take advantage of status, who have had significant problems until

the benefits from the 2017 tax year. According to now acquiring tax resident status. There are very

the earlier regulations, an individual became tax many consultants, computer programmers and

resident in Cyprus, if they spent more than 183 days experts in project work who travel from country

on the island. This has now been amended, so that, to country, never spending more than 2-3 months

under certain conditions, it will be enough to spend in any country in a given year. The exchange of

60 days there. The conditions which must be met information has caused a serious problem with

are as follows: these people, as they are unable to prove to the

the individual concerned must not spend banks where they are resident for tax purposes.

more than a total of 183 days in any other Individuals acquiring tax resident status in this

country way will also be able to take advantage of the

the individual concerned must not be resi- rules applying to the Resident but not Domiciled

dent for tax purposes in any other country status, meaning that income arising from capital

the individual concerned must spend at gains, interest and dividends will be favourably

least 60 days in Cyprus taxed in Cyprus.

September, 2017 Legal Solutions since 1991

Offshore Banking

Our new partner, VirPay

VirPay is an enterprise registered in Hungary which offers

financial solutions, and is licenced to do so by the Hungarian

National Bank. The company opens accounts for both individuals

and foreign companies (including offshore companies), for the

carrying out of both domestic and international transactions.

We recommend the services of VirPay primarily to those looking for current account solutions for their

everyday financial transactions. The opening of accounts is currently possible within a couple of days,

after which transfers can be initiated through the internet banking facility. The staff at LAVECO Ltd. will

be happy to provide more information to anyone wishing to find out more about the services of VirPay.


LAVECO Middle East FZCO-Dubai

The United Arab Emirates is probably the most important business hub in the

Middle East, continuing to offer excellent opportunities to both companies

being established here and private individuals settling here. The country has

more than 30 Free Zones, providing one of the most important driving forces

behind the economy. In order to be able to provide potential enquirers with

the best possible information, after 14 years as an observer in the region,

LAVECO has established the company LAVECO Middle East FZCO. In addition

to the traditional services offered by LAVECO Ltd. company formation, opening of bank accounts,

consultation the new company will also help with the acquisition of local residency permits, and even

with the establishment of webshops.

Legal Solutions since 1991


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